How a Tier-1 NBFC Reduced OTP Failure by 23% Using Multi-Channel Fallback
TLDR
A Tier-1 NBFC processing ₹500+ crore monthly disbursements reduced OTP failures from 8.5% to 1.4% using Fyno's intelligent channel routing platform with automated failover resilience. The solution implemented cross-channel fallback across SMS-WhatsApp-Email, real-time vendor performance monitoring, and centralized DLT compliance; achieving 98.6% delivery rate, 30% cost savings, and ₹2-3 crore quarterly revenue recovery in phase 1. The 3-month implementation required zero code changes to existing loan origination systems.
Why do OTP failures cost NBFCs millions in lost loan disbursements?
Every failed OTP means lost revenue for lending institutions. When a customer can't complete authentication, loan disbursements stop, applications get abandoned, and revenue evaporates. For a Tier-1 NBFC processing ₹500+ crore in monthly disbursements, even a small percentage of OTP failures translates to crores in quarterly losses.
This NBFC faced exactly that problem last quarter. Despite using multiple SMS vendors and processing 100-150 million messages monthly with peak loads reaching 60,000 messages per second, they had no intelligence layer to route traffic efficiently. The result: an 8.5% OTP failure rate costing ₹2-3 crore in lost disbursements every quarter.
"A single vendor outage was costing us ₹2-3 crore in lost disbursements every quarter," explained the NBFC's IT head.
Each failed OTP created a cascade of problems: abandoned loan applications, blocked disbursements, frustrated customers calling support, and immediate revenue impact. The company needed a solution that would guarantee OTP delivery even when primary channels failed.
What was blocking OTP delivery for this high-volume NBFC?
Before implementing Fyno's orchestration platform, the NBFC struggled with three critical failure points that prevented reliable OTP delivery at scale.
Infrastructure fragmentation across multiple SMS vendors
The NBFC had contracts with multiple SMS providers but no unified routing intelligence. Each vendor operated in isolation with its own API, delivery reporting format, and performance metrics. When one vendor experienced capacity issues or regional outages, there was no automatic mechanism to shift traffic to backup providers.
This fragmentation meant:
No real-time visibility into which vendor was performing best at any given moment
Manual intervention required to switch vendors during outages
Inconsistent delivery rates across different times of day and geographic regions
Duplicate infrastructure for monitoring each vendor separately
High-priority OTPs competed with batch processing SMS in the same pipeline. During peak disbursement periods, critical authentication messages got delayed behind bulk transaction alerts, creating bottlenecks exactly when speed mattered most.
Template and DLT compliance mismatches
India's DLT (Distributed Ledger Technology) regulations require precise template matching for SMS delivery. Minor formatting differences, even extra spaces or punctuation variations cause immediate delivery failures at the telecom operator level.
The NBFC faced consecutive template rejections because:
Different SMS vendors required slightly different template formats
No centralized template versioning meant templates drifted out of sync
Manual DLT submissions to each telecom operator portal created approval delays
Template mismatches caused silent delivery failures that weren't caught until customers complained
These compliance issues resulted in messages being blocked at the carrier level, with no delivery receipt ever returned to indicate the failure.
No automatic failover during vendor outages
When the primary SMS vendor experienced issues like network congestion, API failures, or regional outages, the NBFC had no automated backup mechanism. Messages simply failed, and the only indication was when customers called to report they never received their OTP.
The consequences were severe:
5-10 minute manual response times to detect and switch vendors
Zero redundancy for critical authentication flows
No alternative channels like WhatsApp or email for failover
Complete dependency on single-channel SMS delivery
This single point of failure architecture meant any vendor issue directly translated to lost disbursements and degraded customer experience.
How does intelligent multi-channel failover solve OTP delivery failures?
Fyno implemented a four-tier fallback architecture that eliminated single points of failure and guaranteed OTP delivery system across multiple channels. The solution combined intelligent channel routing with real-time vendor performance monitoring and consent-based failover resilience.
Fyno's cross-channel routing architecture
The implementation created an intelligent channel routing layer that sits between the NBFC's Loan Origination System (LOS) and multiple communication vendors. This orchestration platform ensures failover resilience through automated monitoring and dynamic channel selection. Here's how the multi-tier fallback operates:
Primary Channel: SMS via highest-performing vendor
Fyno continuously monitors delivery rates, latency, and error patterns across all connected SMS providers. Each OTP request automatically routes through whichever vendor demonstrates the best real-time performance for that specific operator and region.
Failover Scenario 1: WhatsApp authentication message (if SMS fails within 30 seconds)
When SMS delivery confirmation isn't received within 30 seconds, Fyno automatically triggers a WhatsApp Business API message to opted-in customers. At ₹0.115 per message, WhatsApp serves as both a cost-effective and highly reliable backup channel.
Failover Scenario 2: Secondary SMS vendor
If WhatsApp delivery fails or the customer hasn't opted in for WhatsApp communications, the system immediately routes the OTP through a secondary SMS provider using a different carrier route.
Final Fallback Scenario: Email OTP
As a last resort for customers who maintain email addresses with the NBFC, the system sends email-based OTPs with clear instructions for manual entry.
This cascading approach ensures the message reaches customers through at least one channel, providing failover resilience that eliminates the complete failures previously blocking loan disbursements. The intelligent channel routing engine doesn't just detect failures, it predicts and prevents them by continuously monitoring vendor health metrics.
Real-time vendor performance monitoring: Jio → Airtel → VI
Fyno's routing engine doesn't rely on static vendor assignments. Instead, it tracks performance metrics and communication delivery anomaly in real-time, and adapts routing decisions dynamically:
Performance-based routing triggers:
Delivery success rates tracked per vendor, per operator (Jio, Airtel, VI), per geographic circle
P90 and P99 latency metrics measuring end-to-end delivery time
DLT rejection patterns identifying template or compliance issues before they impact bulk traffic
API response times and error codes signalling vendor capacity constraints
When any vendor's performance degrades below defined thresholds, traffic automatically shifts to backup providers, no manual intervention required. This intelligent routing handles both catastrophic outages and gradual performance degradation.
Automated failover sequence: SMS → WhatsApp → Email
The complete failover sequence executes automatically based on delivery receipts and timeout thresholds:
Initial SMS attempt (T+0 seconds): Primary vendor selected based on real-time performance data
Delivery receipt monitoring (T+0 to T+30 seconds): System waits for confirmation from mobile operator
WhatsApp failover trigger (T+30 seconds): If no SMS confirmation, WhatsApp message sent to opted-in customers
Secondary SMS attempt (T+45 seconds): For non-WhatsApp users, backup SMS vendor activated
Email fallback (T+60 seconds): Final attempt via email for maximum reach
Throughout this sequence, Fyno maintains complete audit trails showing exactly which channels were attempted, what delivery receipts were received, and which channel ultimately succeeded - critical for RBI compliance and operational troubleshooting.
The entire orchestration adds less than 100ms processing latency. The NBFC's upstream LOS system required zero code changes; Fyno handles all routing intelligence transparently through webhook callbacks that report final delivery status regardless of which channel succeeded.
What results did the NBFC achieve after implementing Fyno?
The transformation from fragmented vendor management to unified orchestration delivered measurable business impact across delivery reliability, operational costs, and compliance assurance.
23% reduction in OTP failures
The 7.1 percentage point improvement translated directly to faster loan disbursements and reduced customer friction. Fyno also generated MIS reports for better data cleaning and management. The goal is to achieve 100% deliverability in another quarter.
During peak periods, like salary dates and festive seasons when loan demand spikes, the system maintains consistent delivery rates without manual scaling interventions.
Most critically, the NBFC eliminates complete vendor outage scenarios. When one SMS provider experienced a regional network issue during month two of the rollout, the intelligent failover automatically redistributed traffic across backup channels with zero customer-visible impact.
30% cost savings through intelligent routing
Multi-channel orchestration delivered substantial cost optimisation beyond just improved reliability:
Intelligent channel selection:
WhatsApp Business API at ₹0.115 per message replaced expensive SMS routes where customers had opted in
Performance-based routing eliminated paying premium rates to underperforming vendors
Automatic retry prevention stopped duplicate OTP sends that previously cost unnecessary credits
Eliminated redundant vendor spend:
Consolidated from maintaining excess capacity across all vendors "just in case"
Terminated contracts with consistently underperforming regional providers
Negotiated better rates with top-performing vendors based on data-driven performance metrics
Reduced operational waste:
Stopped paying for messages that would fail due to DLT mismatches (caught at template stage)
Prevented redundant OTP resends by customers who claimed non-receipt
Automatic de-duplication prevented double-charging when users requested multiple OTPs rapidly
The 30% cost reduction was achieved while simultaneously improving delivery rates and that’s proof that intelligent orchestration drives both reliability and efficiency.
Consolidated vendor reconciliation and compliance audit trail
Perhaps the most significant operational improvement came from unified visibility across previously fragmented communication channels.
Single platform for all communication management:
Template management: All SMS, WhatsApp, and email templates maintained in one versioned repository
DLT submission workflow: Direct integration with telecom operator DLT portals for template approvals
Maker-checker controls: Internal approval workflows ensure template changes undergo review before production deployment
Consent management: Centralized tracking of customer opt-ins across channels, automatically enforced during routing
Consolidated reconciliation across vendors:
Unified billing dashboard: All SMS, WhatsApp, and email vendor invoices reconciled against actual delivery receipts in one view
Automatic invoice verification: System flags discrepancies where vendors bill for messages that delivery logs show failed
Cross-vendor analytics: Compare cost-per-successful-delivery across providers to optimize vendor mix
Complete compliance audit trail:
Per-OTP delivery tracking: Every authentication message traced across all attempted channels with timestamps
RBI-compliant logging: Complete audit trail showing delivery attempts, channels used, and ultimate delivery confirmation
TRAI DLT compliance: Automated validation that all SMS templates match approved DLT registrations before sending
Data localization: All logs and customer data stored in India-based infrastructure per RBI mandates
The NBFC reduced IT dependency for routine template updates and vendor management. Marketing and operations teams now handle template modifications through no-code workflows, with the system automatically enforcing DLT compliance and obtaining necessary approvals before messages go live.
Real-time MIS dashboards provide instant visibility into delivery performance, cost trends, and compliance posture, insights that previously required manual data gathering across multiple vendor portals.
How was the implementation rolled out in 3 months?
To transition from fragmented vendor management to unified orchestration, the NBFC deployed Fyno's intelligent communication platform through a structured rollout:
Month 1: Data Analysis & Baseline Establishment
Fyno's team conducted a comprehensive historical analysis of 3 months of OTP delivery logs across all existing SMS vendors.
This identified
Vendor-specific failure patterns,
Time-of-day performance variations,
Operator-wise delivery rates, and
DLT compliance gaps.
The baseline measurement established a 91.5% OTP success rate, quantified cost per successful delivery across vendors, and documented peak load periods reaching 60K messages/second.
Month 2: Platform Configuration & Proof of Concept
The NBFC configured Fyno's routing engine with:
Performance-based routing rules: Defined acceptable thresholds for delivery rate, latency, and error percentage per vendor and operator
Automated failover logic: Set 30-second SMS timeout triggers before WhatsApp activation, with consent-based channel preferences
Centralized template management: Migrated all OTP templates into Fyno's versioned repository with maker-checker approval workflows and direct DLT platform integration
Geographic routing optimization: Created operator-specific rules based on historical performance data (Jio, Airtel, VI)
A controlled POC routed 1 million OTPs through Fyno while maintaining the existing system as backup. This validated that Fyno added less than 100ms processing latency and confirmed automatic failover logic activated correctly during simulated vendor failures.
Month 3: Production Scale-Up & Optimization
The NBFC switched all OTP traffic to Fyno's orchestration layer with:
Zero-code LOS integration: Fyno's unified API required no changes to upstream Loan Origination System, integration handled entirely through webhook callbacks
Real-time performance tuning: Adjusted vendor routing weights based on observed delivery success rates and optimized failover timeout thresholds
Full volume validation: Successfully handled 100-150 million messages monthly at 60K messages/second peak loads while maintaining sub-100ms orchestration latency
98.6% delivery rate achievement: Exceeded the 95% target set at project start with zero outages during cutover
Post-Implementation Data Cleaning & Insights
After one month of production operation, Fyno provided detailed MIS reports identifying:
Phone numbers with consistently failed deliveries requiring database cleanup
Template variations triggering DLT rejections
Optimal vendor mix based on performance and cost data
Additional WhatsApp opt-in opportunities to further reduce SMS costs
The vendor-agnostic architecture enabled the NBFC to add new SMS and WhatsApp providers through configuration changes rather than development projects, eliminating vendor lock-in while improving redundancy.
What are the key success factors for multi-channel OTP delivery?
The NBFC's successful transformation from 91.5% to 98.6% OTP delivery rate demonstrates five critical factors for reliable authentication at scale.
Vendor-agnostic orchestration architecture, no lock in
No single CPaaS provider or SMS aggregator can guarantee 100% uptime across all operators and regions. Fyno's vendor-neutral design meant the NBFC wasn't locked into any specific provider's network. When performance degrades, traffic shifts automatically to leverage a multi-provider network to maintain reliability.
Real-time intelligent failover without manual intervention
Human operators can't respond fast enough when OTPs fail during peak loan disbursement periods. Automated failover based on delivery receipt monitoring and performance thresholds ensures backup channels activate within seconds, not minutes. This failover resilience means the system doesn't wait for humans to notice problems, rather it detects and resolves them automatically through intelligent channel routing that continuously evaluates vendor health.
Compliance-first design for BFSI regulations
Financial institutions face strict RBI, TRAI DLT, and data localization requirements.
Fyno's built-in compliance features
automated DLT template validation,
consent management,
complete audit trails, and
India-based data storage,
eliminates the compliance burden that typically slows down communication infrastructure changes.
Unified visibility replacing fragmented vendor portals
Managing multiple SMS vendors, WhatsApp Business Service Providers, and email platforms through separate dashboards creates blind spots. A single pane of glass showing delivery rates, costs, and compliance status across all channels enables data-driven optimization and faster troubleshooting.
Zero latency overhead despite added intelligence
Adding an orchestration layer between applications and communication vendors could theoretically increase end-to-end delivery time. Fyno's architecture maintains sub-100ms processing overhead, ensuring intelligent routing doesn't sacrifice the speed critical for OTP user experience.
Bottom line: Multi-channel failover eliminated the single point of failure that previously cost this NBFC ₹2-3 crore quarterly.
The 23% OTP failure reduction translates to
faster loan disbursements,
improved customer experience, and
millions saved
while simultaneously reducing operational complexity through unified vendor management.
Which other BFSI use cases benefit from intelligent routing?
OTP delivery is just one use case for intelligent cross-channel orchestration. Financial institutions apply the same routing principles across multiple communication scenarios:
Transaction alerts and payment confirmations:
Real-time notifications confirming UPI payments, NEFT transfers, or credit card transactions require the same guaranteed delivery as OTPs. Fyno's multi-channel approach ensures customers receive critical security alerts even when SMS networks are congested. WhatsApp fallback provides a richer notification format with transaction details, while email serves as a permanent record.
Payment reminders and EMI collection notices:
NBFCs and lenders use intelligent routing to maximize reach for payment reminders. Cost-optimized routing sends bulk reminders via lower-cost channels (email, WhatsApp) first, escalating to SMS for high-priority notices closer to due dates. This reduces communication costs while maintaining collection effectiveness.
KYC verification links and document requests:
Customer onboarding requires sharing document upload links and KYC completion requests. Multi-channel delivery ensures regulatory compliance by creating audit trails showing multiple delivery attempts across channels. If customers don't respond to initial email requests, automated escalation via SMS or WhatsApp improves completion rates.
Loan application status updates:
Keeping applicants informed throughout the loan approval process reduces support calls and improves experience. Intelligent routing sends updates through customers' preferred channels
WhatsApp for rich media (document checklists, approval letters),
SMS for brief status changes,
Email for detailed information.
Fraud alerts and security notifications:
Suspicious transaction alerts require immediate delivery via a channel that reaches the customer fastest. Multi-channel failover ensures that time-sensitive fraud prevention messages don't fail due to temporary issues with any single communication provider.
Any BFSI communication that impacts revenue, customer experience, or regulatory compliance benefits from the same intelligent orchestration that improved this NBFC's OTP delivery. The architecture solves a universal problem: guaranteeing message delivery despite unreliable individual communication channels.
SUMMARY
Key Takeaways:
23% OTP failure reduction achieved through 4-tier cross-channel fallback (SMS → WhatsApp → Secondary SMS → Email) with failover resilience that eliminates a single point of failure
30% cost optimisation delivered by intelligent channel routing that selects the lowest-cost channels based on real-time performance metrics rather than static vendor assignments
Zero latency overhead - Sub-100ms orchestration processing maintained even at 60K messages/second peak loads
Unified compliance management - Centralized DLT template validation, maker-checker approval workflows, and complete audit trails replaced fragmented vendor portal management
Vendor-agnostic architecture - Adding/removing SMS aggregators or WhatsApp BSPs requires configuration changes rather than development work, eliminating CPaaS lock-in
3-month implementation with zero downstream application changes - Existing LOS systems route traffic through Fyno's unified API transparently
Automated failover activates in 30 seconds with intelligent routing that continuously monitors vendor health and switches channels before failures impact customers
Consolidated vendor reconciliation across SMS, WhatsApp, and email through single dashboard showing cost-per-successful-delivery across all providers
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